London close: Stocks finish stronger after positive US stimulus news

(Sharecast News) - Stocks in London managed to hold onto their gains by the close on Thursday, helped along by reports that pointed to a possible breakthrough in talks on Capitol Hill to agree a fourth government stimulus package.
The FTSE 100 ended the session up 0.23% at 5,879.45, and the FTSE 250 was 0.39% firmer at 17,383.46.

Sterling was weaker in afternoon trading, last falling 0.27% on the dollar to trade at $1.2885, and losing 0.5% against the euro to €1.0969.

"Markets are pushing towards the end of the week in a largely positive tone today, with hopes of a second coronavirus stimulus package from the US congress helping to prop up stocks," said IG senior market analyst Joshua Mahony.

"While time is dwindling for US politicians to reach an agreement ahead of the election, there appears to be a glimmer of light after Mnuchin signalled agreement over a fresh bout of direct payments."

Mahony said there was reason to believe that Democrats would hold off on approving a major package that could boost Trump's re-election hopes.

"However, optimism from the likes of Pelosi and Mnuchin do point towards a potential breakthrough.

"US sentiment was given another leg higher after the latest batch of jobless claims figures portrayed an economy which continues to improve.

"Coming just a day before the US jobs report, today's greater-than-expected drop in initial and continuing jobless claims has helped raise hopes that tomorrow's payrolls and unemployment rate will improve."

Overnight, White House chief of staff, Mark Meadows, told reporters aboard Air Force One that the latest offer from the Trump administration is "certainly above the $1.5 trn that has been articulated to date", versus the $2.2trn proposed by Democrats.

With Democrats and Republicans set to sit down for negotiations again on Thursday, Craig Erlam, senior market analyst at Oanda, said: "Whether it actually yields anything is another thing but there's more optimism around a pre-election stimulus package than there was a week ago and that's obviously great news for investors.

"The recovery has far exceeded expectations in the US but there's still a long way to go and a failure to agree a stimulus package will be hugely detrimental to the economy.

"A poor jobs report may force Congress to compromise, under pressure from the White House, with a self-imposed stalled recovery being the last thing Trump needs going into election day."

Also on Wednesday evening, Trump had signed the stop gap spending bill needed to tide government over until 11 December.

Closer to home, IHS Markit's factory sector purchasing managers' index for September was revised lower from a preliminary reading of 54.3 to 54.1, while that for the single currency bloc was confirmed at 53.7.

Fresh data out of the States in the afternoon, meanwhile, showed initial jobless claims dropping last week, as the US jobs market continued on its slow recovery from the Covid-19 pandemic.

First-time claims fell to 837,000 in the week ended 25 September, according to the Labor Department, better than both the 850,000 expected by analysts on the Street and the previous week's upwardly revised print of 870,000.

The figure marked the fifth week in a row that initial claims had come in under 1.0m after having stayed above that number ever since the coronavirus outbreak sent the US into a virtual economic standstill in mid-March.

Continuing claims fell 980,000 week-on-week to 11.77m.

In equity markets, AstraZeneca was up 0.26% after the US Food and Drug Administration widened its investigation into the adverse event related to one patient in its ongoing phase 3 clinical trial of its Covid-19 vaccine candidate, which remains on hold in the States.

The expanded probe increased the chances of longer delays before a potential restart of the trial in that country.

Aircraft engine maker Rolls-Royce was down 10.15% after it unveiled plans to raise at least £3bn to shore up its balance sheet in the face of the coronavirus pandemic.

The company announced a 10-for-three £2bn rights issue and £1bn bond offering, and also agreed a new £1bn two-year term loan facility conditional upon the rights issue completing.

Roll-Royce has been hammered particularly hard by the collapse in air travel as it is paid by the number of miles flown by aircraft using its engines.

Medical technology company Smith & Nephew managed gains of 1.32%, after it said it was expecting a third quarter underlying revenue decline of about 4%.

The FTSE 100 company said all three of its franchises showed "significant" recovery, following an overall underlying revenue decline of 29.3% for the second quarter.

It explained that the improvement was strongest in its orthopaedics franchise, as global levels of elective surgery continued to recover.

Market Movers

FTSE 100 (UKX) 5,879.45 0.23%
FTSE 250 (MCX) 17,383.46 0.39%
techMARK (TASX) 3,747.78 0.11%

FTSE 100 - Risers

Melrose Industries (MRO) 120.20p 4.07%
SSE (SSE) 1,253.00p 3.81%
Smith (DS) (SMDS) 305.00p 3.50%
Mondi (MNDI) 1,686.00p 3.20%
Standard Life Aberdeen (SLA) 233.20p 3.19%
United Utilities Group (UU.) 882.60p 3.13%
3i Group (III) 1,021.50p 3.05%
Pennon Group (PNN) 1,062.00p 3.01%
GVC Holdings (GVC) 1,001.00p 2.98%
Smurfit Kappa Group (SKG) 3,128.00p 2.89%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 116.80p -10.15%
DCC (DCC) 5,598.00p -6.62%
Royal Dutch Shell 'A' (RDSA) 928.00p -3.72%
Royal Dutch Shell 'B' (RDSB) 907.30p -3.50%
BP (BP.) 218.20p -3.11%
InterContinental Hotels Group (IHG) 3,976.00p -2.78%
Antofagasta (ANTO) 1,005.50p -1.76%
British American Tobacco (BATS) 2,736.50p -1.48%
International Consolidated Airlines Group SA (CDI) (IAG) 93.82p -1.26%
Evraz (EVR) 340.50p -1.19%

FTSE 250 - Risers

Premier Foods (PFD) 99.60p 7.68%
Liontrust Asset Management (LIO) 1,325.00p 6.45%
Beazley (BEZ) 319.00p 4.32%
SSP Group (SSPG) 187.90p 4.10%
Greggs (GRG) 1,222.00p 4.00%
FirstGroup (FGP) 39.60p 3.99%
Clarkson (CKN) 2,350.00p 3.98%
Serco Group (SRP) 132.00p 3.77%
CMC Markets (CMCX) 321.00p 3.72%
Unite Group (UTG) 867.00p 3.40%

FTSE 250 - Fallers

Pets at Home Group (PETS) 395.20p -6.53%
Britvic (BVIC) 770.00p -6.21%
4Imprint Group (FOUR) 1,760.00p -5.78%
Capita (CPI) 29.12p -4.74%
Network International Holdings (NETW) 261.00p -4.47%
SDL (SDL) 654.00p -4.41%
Carnival (CCL) 969.80p -2.92%
Playtech (PTEC) 352.50p -2.81%
TP ICAP (TCAP) 222.00p -2.72%
Helios Towers (HTWS) 152.40p -2.68%